Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-June brought encouraging if not entirely positive news regarding US industrial production. Both the Federal Reserve and the Institute for Supply Management (ISM) report industrial production figures for were significantly better than those in preceding months.

According to the Federal Reserve, June’s 0.4% rate of production decline at factories, mines and utility companies was the lowest in eight months. Though still negative, the figure was considerably improved over the 1.2% decline recorded for May. It was also below the 0.6% economists had forecast. However, factory output alone, which accounts for 80% of industrial production, did fall 0.6%. In addition, the level of industrial capacity in use dropped to a record-low of 67%.

According to Tempe, AZ-based ISM, its monthly factory services index for June rose to a reading of 44.8, from 42.8 in May. The result marked the sixth straight month-to-month increase and the highest reading since August 2008. Though the figure means the manufacturing sector has now contracted 17th months straight, the fact the rate of contraction is slowing indicates the economy is gradually regaining equilibrium. Index readings of more than 50 indicate expansion, while readings below 50 indicate contraction.

Several of the institutes industrial indexes actually went above 50 in June. “Most encouraging,” says Norbert Ore, chair of ISM’s business survey committee, “is the gain in the production index, which is up 12.1 points in the last two months to a 52.5 reading.” The index rose 6.5 points in June. In other readings, the institute’s prices index increased 6.5 points to 50, while supplier deliveries rose 0.8 point to 50.6. The employment index also rose 6.4 points but remained at a disappointingly low 40.7 reading.

“Aggressive inventory reduction continues and indications are that the destocking cycle is at or near the end in most industries, as the customers’ inventories index remained below 50 for the third consecutive month,” says Ore. “The prices index was unchanged from May, indicating that the supply/demand balance is improving. Overall, a slow recovery for manufacturing is forming based on the current trends in the ISM data.”

In addition to the slowing rate of contraction, ISM says seven of the 18 industrial sectors it tracks registered growth in June. Sectors showing growth included petroleum and coal products; printing and related support activities; wood products; nonmetallic mineral products; miscellaneous manufacturing; chemical products; and primary metals. Industries reporting contraction in June were apparel, leather and allied products; furniture and related products; machinery; computer and electronic products; electrical equipment, appliances and components; plastics and rubber products; textile mills; transportation equipment; food, beverage and tobacco products; and fabricated metal products.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.